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6 Key Takeaways From the Stupidity and Reality of IRS 'Scandal'

The maddening episode reveals how Washington works.
 
 
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US President Barack Obama said May 16, 2013, he had not known about abuses by tax officials who targeted conservative groups until a report into the affair was leaked to the press last week.

 
 
 
 

There’s so much that’s upside-down and ill-informed about the "IRS scandal" unfolding in Washington, starting with the fact that no one has pointed a finger at the people who created these abuses in the first place: senior political consultants and lawyers. And doesn’t anyone see the hypocrisy of the GOP for calling out the IRS for targeting groups (that lied about being charities) when that party has been targeting black and brown voters for years via every imaginable "voter-fraud" law?

It would be stunning if the current "scandal" led to an informed discussion about the lies and loopholes and campaign law-evading tactics used by both parties in the post-Citizens United era, where lawyers exploited legal ambiguities to run campaigns with little or no accountability. However, that’s not going to happen when too many of the politicians screaming scandal were elected using these dark money deceits.

Let’s go through some of the most maddening aspects of this evolving episode, with an eye to identifying the real scandal and the real culprits.

1. The IRS made mistakes with both parties. The scandal mongers have said that the IRS went too far in pressing Tea Party groups for information when applying for federal non-profit tax status. Lost in this fine print is a critical fact. As Bloomberg.com reported, IRS staffers sent the same questionaire to Democratic groups suspected of not being charities but political as well. So it’s not just an "attack" on Republicans. 

2. The real issue is the IRS isn’t doing its job. On Wednesday, Rhode Island Democratic Sen. Sheldon Whitehouse gave a speech in the Senate where he laid out the fictions used by political groups to masquarade as charities. He pointed out that industry groups—like PhRMA, the drug company lobby—file reports to IRS and Federal Election Commission filled with contradictory information about their political activities. “Making a material false statement to a federal agency is not just bad behavior, it’s a crime,” he said. But “the Department of Justice won’t prosecute false statements… unless the case has been referred by the IRS… [and] the IRS never makes a referral.”  

“So it is very wrong that the IRS required additional information from a number of organizations based on a screen incorporating their Tea Party orientation,” Whitehouse said. “Picking on the little guy is a pretty lousy thing to do; rolling over for the powerful and letting them file false statements is pretty lousy too.”

3. Team Obama’s hysterical overreactions. The adminstration’s reactions, from the president to Attorney General Eric Holder, have fed the hysteria and given the GOP a green light to turn the Tea Party into victims. Not only did the firing of the IRS acting director come prematurely, but Obama’s overreaction cements the notion that many local Tea Party groups—frequently funded by the Koch brothers—were entitled to be treated the same under tax law as the March of Dimes. Moreover, Holder’s statement that he was recusing himself while announcing the FBI investigation just picks another fight between the administration and congressional Republicans. What Obama could have done was take the risk of explaining how the system really works—what’s broken—and the solutions, even though he has been a beneficiary of it.

4. Charities are not political front groups.The question of who turned charities into political front groups has barely been discussed. The answer, of course, is the same as it always has been: election lawyers and campaign consultants who look for loopholes in the law so clients can run for office using any tactic with little or no accountability.

Media coverage of this scandal has had the wrong starting line. It wasn’t the IRS that deluged its staff with thousands of applications from political groups pretending to be charities. It was groups following the advice or example of campaign consultants such as Karl Rove. He was the first to use this ruse on a large scale in order to run a shadow presidential campaign where he could hide his donors’ identities.

The way this works is simple. After the U.S. Supreme Court’s Citizens United ruling deregulated campaign finances, political operators looked for ambiguities to exploit and turned to non-profit tax law—knowing the agency's primary focus has nothing to do with electioneering. One of the legal ambiguities is the fiction that "public education" and "lobbying" activities by non-profits groups are not political (and thus subject to election law) if they comprise more than 50 percent of that group’s activities.

So that’s what Karl Rove ginned up with his non-profit Crossroads GPS, which spent $123 million for the 2012 federal elections, according to the Sunlight Foundation, with 70 percent raised from secret donors. The IRS still has not issued a ruling on whether Rove’s group violated non-profit tax law.

5. The IRS’s top GOP critics were elected this way. Pennsylvania Republican Sen. Pat Toomey might be the GOP frontman on federal gun controls, but on this issue he has compared the IRS scrutiny to President Richard Nixon’s infamous enemies list. Of course, two political non-profits, Rove’s Crossroads GPS and the Republican Jewish Coalition spent $17.6 million on his behalf by the time Election Day rolled around last fall. He’s hardly the only member of Congress whose rise to power was helped by political front groups masquerading as tax-exempt charities.

One of the unwritten but enduring Washington rules is that both political parties will not tinker with the tactics that helped them gain power—because they mastered the system to get elected. But that is not even the biggest GOP hypocrisy surrounding this "scandal."

6. Lies are so big they hide in plain sight. The party known for voter suppression and intimidation now feels targeted? The spectacle of Republicans protesting that its groups were targeted by the IRS, when the only business of some of these groups was to lead the GOP’s 2012 voter suppression efforts, is just unbelievable. The GOP has spent years trying to discourage and suppress voting blocks that it perceives will back Democrats, such as black and brown voters, and students. Its entire "voter fraud" canard is based on policing the polls in myriad ways targeting millions of voters. 

But now the GOP is upset—with Speaker of the House John Boehner saying he wants the guilty put in jail—because groups like True The Vote were not given the same tax status as the Girl Scouts? They have spent years in state after state imposing tougher ID laws, criminalizing voter registration drives, curtailing early voting, and on and on.

There are so many reasons why this "scandal" reflects what’s really wrong in our political culture. But watching it unfold literally is like watching the blind leading the blind—and the rest of us have to live with the results of these political subterfuges. This scandal is about the perpetuation of lies and deceits in modern campaigns and politics. Meanwhile, the solution, more transparency and disclosure, is going nowhere.

Steven Rosenfeld covers national political issues for AlterNet, including America's retirement crisis, the low-wage economy, democracy and voting rights, and campaigns and elections. He is the author of "Count My Vote: A Citizen's Guide to Voting" (AlterNet Books, 2008).